Supernus Pharmaceuticals, Inc. (NASDAQ:SUPN) Q3 2023 Earnings Call Transcript
Supernus Pharmaceuticals, Inc. (NASDAQ:SUPN) Q3 2023 Earnings Call Transcript November 8, 2023
Supernus Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $0.24, expectations were $0.13.
Operator: Good afternoon, and welcome to Supernus Pharmaceuticals Third Quarter 2023 Financial Results Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session, instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Peter Vozzo of ICR Westwicke, Investor Relations representative for Supernus Pharmaceuticals. You may begin.
Peter Vozzo: Thank you, Stephen. Good afternoon, everyone, and thank you for joining us today for Supernus Pharmaceuticals' third quarter 2023 financial results conference call. Today, after the close of the market, the company issued a press release announcing these results. On the call with me, today are Supernus' Chief Executive Officer, Jack Khattar; and Chief Financial Officer, Tim Dec. Today's call is being made available via the Investor Relations section of the company's website at ir.supernus.com. During the course of this call, the management may make certain forward-looking statements regarding future events and the company's future performance. These forward-looking statements reflect Supernus' current perspective on existing trends and information.
Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those noted in the Risk Factors section of the company's latest SEC filings. Actual results may differ materially from those projected in these forward-looking statements. For the benefit of those of you, who may be listening to the replay, this call is being held and recorded on November 08, 2023. Since then, the company may have made additional announcements related to the topics discussed. Please reference the company's most recent press releases and current filings with the SEC. Supernus declines any obligation to update these forward-looking statements, except as required by applicable securities laws. I'll now turn the call over to Jack.
Jack Khattar: Thank you, Peter. Good afternoon, everyone, and thanks for taking the time to join us as we discuss our 2023 third quarter results. Supernus continues to execute well during a transition year with the loss of exclusivity on its flagship brand, Trokendi XR. Our third quarter performance underscores our strong execution with combined net sales of $70 million for our growth products, Qelbree and GOCOVRI, representing an increase of 52% in the third quarter of 2023 compared to the same period last year. This $70 million in net sales from Qelbree and GOCOVRI far exceeded the $49 million decline in Trokendi XR net sales in the third quarter compared to the same period last year. Similarly, for the first nine months of 2023, combined net sales of Qelbree and GOCOVRI grew by 61%, reaching $182 million, far exceeding the $129 million decline in net sales of Trokendi XR during the same period.
In addition, and excluding Trokendi XR, total year-to-date 2023 revenues for Supernus grew by 25% compared to the same period last year. Moving on to the ADHD market, this year's back-to-school season showed a decline of 3% in total U.S. ADHD prescriptions in the month of September 2023, when the new school year is mostly in full swing across the U.S., as compared to the month of June 2023, when the prior school year mainly ends. This contrasts with the 4% to 10% growth in the previous four years over the same time period. While the overall ADHD market had a soft back-to-school season, Qelbree delivered robust prescription growth of 16.6% in September 2023 compared to June 2023. In addition, Qelbree accelerated its quarterly sequential prescription growth in the third quarter 2023 to 12% up from the 9% sequential growth in the second quarter of this year.
During the third quarter of 2023, the average net price per prescription for Qelbree was $227, an increase of 7% compared to the second quarter of 2023. This increase was primarily due to an improvement in gross to net, which was around 58.7%, the lowest since the launch of the product, and a key step towards our year-end target of 50% to 55%. As a result, Qelbree net sales in the third quarter grew by 20% and 100% compared to the second quarter of this year and the third quarter of last year, respectively. Finally, during the third quarter, Qelbree expanded its base of prescribers to approximately 24,189, up from 21,291 prescribers from the second quarter of 2023. Switching now to GOCOVRI, net sales increased to $33 million in the third quarter of 2023, representing a healthy increase of 18% over the same period in 2022 and 14% over the second quarter of this year.
We continue to be pleased with the performance of the brand, which is now at an annualized run rate of approximately $130 million in net sales. Regarding Oxtellar XR, third quarter net sales were $30 million, essentially stable compared to net sales in the same period last year. For Trokendi XR, net sales in the third quarter were $21 million, up slightly from $19 million in the second quarter and down from $70 million in the third quarter of last year. Given the performance of Trokendi XR in the first nine months of this year, we are revising our financial guidance and now expect approximately $90 million in net sales for full year 2023. Regarding SPN-830, earlier this month, the FDA accepted the resubmission of the NDA and assigned to it a PDUFA date of April 5, 2024.
A few weeks ago, we held an R&D Day and shared an overview of our emerging CNS pipeline of novel product candidates. We highlighted an exciting pipeline of new chemical entities, some of which are first-in-class mechanisms of action to treat multiple therapeutic areas in CNS. The company has a significant number of near-term milestones. First, the initiation of a Phase IV study with Qelbree in ADHD patients with comorbid mood disorders, such as depression and anxiety, before year-end 2023. Second, the initiation of a Phase II open-label study with SPN-820 in approximately 40 subjects with major depressive disorder, also before year-end 2023. Third, getting top-line data in the first half of 2024 from the Phase IIa study of SPN-817 for treatment-resistant focal seizures.
Fourth, the initiation of a Phase IIb placebo-controlled study with SPN-817 in patients with treatment-resistant focal seizures, also in the first half of 2024. And fifth, the potential launch in the second half of 2024 of SPN-830 for the continuous treatment of motor fluctuations in Parkinson's disease, if approved by the FDA. Finally, we remain active in corporate development, looking for strategic opportunities to further strengthen our future growth and leadership position in CNS. With that, I will now turn the call over to Tim.
Tim Dec: Thank you, Jack. Good afternoon, everyone. As I review our third quarter 2023 results, please refer to today's press release and 10-Q that was filed earlier today. Total revenue for the third quarter of 2023 was $153.9 million compared to $177.4 million in the same quarter last year. Total revenue in the third quarter of 2023 was comprised of net product sales of $149 million and royalty revenue of $4.9 million. The $23.7 million decrease in net product sales was primarily due to a $49 million decline in net product sales of Trokendi XR, offset by a $23.8 million increase in net product sales of our growth products, Qelbree and GOCOVRI. Excluding net product sales of Trokendi XR in both periods, total revenue for the third quarter of 2023 increased 24% compared to the same period last year.
For the third quarter of 2023, combined R&D and SG&A expenses were $105.4 million as compared to $131.9 million for the same period last year. The decrease was primarily due to lower SG&A expenses in the third quarter of 2023 compared to the third quarter of 2022 as activities to support the launch of Qelbree to the adult population and the direct-to-consumer campaign substantially occurred in the third quarter of 2022. Operating earnings on a GAAP basis for the third quarter of 2023 was $8.1 million as compared to an operating loss of $1.5 million for the same period last year. Income tax expense in the third quarter of 2023 was $25.9 million as compared to an income tax benefit of $2.2 million for the same period last year. GAAP net loss was $16 million for the third quarter of 2023, or loss per diluted share of $0.29, compared to GAAP net earnings of $1.7 million, or earnings per diluted share of $0.03 in the same period last year.
On a non-GAAP basis, which excludes amortization of intangibles, share-based compensation, contingent consideration and depreciation, adjusted operating earnings was $37.3 million compared to $25.4 million in the same period last year. Total revenue for the nine months ended September 30th, 2023 was $443.2 million compared to $499.9 million in the same period last year. Total revenues were comprised of net product sales of $417.9 million and royalty revenue of $25.3 million. The $67.7 million decrease in net product sales was primarily due to a $129.3 million decline in net product sales for Trokendi XR, partially offset by a $68.6 million increase in net product sales of our growth products, Qelbree and GOCOVRI. Excluding net product sales of Trokendi XR in both periods, total revenues for the nine months ended September 30th, 2023 increased 25% compared to the same period last year.
Combined R&D and SG&A expenses for the nine months ended September 30, 2023 were $323.3 million as compared to $360 million for the same period last year. Again, this decrease was primarily due to lower SG&A expenses in 2023 as compared to 2022 as activities to support the launch of Qelbree to the adult population and the direct-to-consumer campaign occurred in 2022. Operating loss on a GAAP basis for the nine months ended September 30th, 2023 was $4.3 million as compared to operating earnings of $11.8 million for the same period last year. Income tax expense for the nine months ended September 30th, 2023 was $1.6 million as compared to an income tax benefit of $9.6 million for the same period last year. GAAP net earnings was $141,000 for the nine months ended September 30th, 2023, or $0.00 per diluted share, compared to $35.2 million, or $0.62 per diluted share, in the same period last year.
On a non-GAAP basis, which again excludes amortization of intangibles, share-based compensation, contingent consideration and depreciation, adjusted operating earnings was $77.9 million compared to $91.1 million in the same period last year. As of September 30th, 2023, the company had approximately $225.3 million in cash, cash equivalents and marketable securities compared to $555.2 million as of December 31st, 2022. The decrease was due to repayment of the convertible security notes in 2023, offset by cash generated from operations. The company has a strong balance sheet and significant financial flexibility for potential BD and other value creating opportunities. Now turning to guidance. For the full year 2023 the company is amending its financial guidance as follows: for total revenue, we are narrowing the range to $590 million to $610 million, compared to our prior guidance of $580 million to $620 million; for the full year 2023, we expect combined R&D and SG&A expenses to range from $420 million to $440 million, down from our prior guidance of $450 million to $480 million.
Overall, we expect 2023 GAAP operating loss to range from $5 million to $15 million, an improvement from the previous guidance range of an operating loss of $10 million to $30 million. We are also increasing our GAAP operating earnings – non-GAAP, excuse me, operating earnings for the full year 2023 and now expect a range of $95 million to $110 million compared to a range of $75 million to $100 million previously. Please refer to the earnings press release issued prior to the call that identifies the various ranges of reconciling items between GAAP and non-GAAP. With that, I will now turn the call over to the operator for Q&A. Operator?
Operator: Thank you. At this time, we will conduct a question-and-answer session. [Operator Instructions] First question comes from the line of Andrew Tsai of Jefferies. Your line is now open.
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